Government Operations Committee on May 8th, 2023

[Yves Giroux]

I can talk about professional and special services. These include health and welfare services, which in good part is spending to provide health services to first nation communities and remote communities. This also includes other types of spending, such as on engineering services, financial management and economic development, so it includes a wide variety of different types of services.

Whether it provides good value for money I think is a question that it is up to each minister to answer, because we have not looked at the types of services and whether these services are provided at the best cost possible, or whether the services are of very good quality. I assume the departments that are providing these contracts do some sort of due diligence to ensure they get good value for money, but it's not my role to provide that type of assessment.

[Majid Jowhari, Liberal, Richmond Hill, ON]

Thank you very much.

I have about a minute, and I want to go back to the second pillar of the budget that was put out. It had to do with health care.

In your report, you talked about the total amount of $198 million and the $49.4 billion. Specifically, I want to talk about the $25 billion over 10 years that was earmarked for bilateral agreements. Were you able to get some detail about how that $25 billion will be spent?

[Yves Giroux]

It's not something that we have studied yet, because the agreements are relatively recent and they seem to be straight transfers to provinces and territories, so no, I haven't looked at exactly how these amounts will be spent by provinces and territories.

[Majid Jowhari, Liberal, Richmond Hill, ON]

Once again, thank you.

[The Chair, Conservative, Kelly McCauley]

Well done, sir.

Mrs. Vignola, you have six minutes.

[Julie Vignola, Bloc, Beauport—Limoilou, QC]

Thank you very much, Mr. Chair.

Mr. Giroux, thank you for being with us again today.

When I look at figure 1-3, which is titled “Year-over-year change in the composition of budgetary authorities”, I see that transfer payments are decreasing by about 1%, as are operating and capital expenditures.

Should we link the decrease in transfer payments to the fiscal imbalance? Are the numbers a bit skewed because, owing to the pandemic, there were more transfers to Quebec and the Canadian provinces? Is it a combination of the two? In short, I would like to understand what the decrease in transfer payments is related to.

[Yves Giroux]

This very slight decrease in transfer payments from year to year is largely due to the transition following the end of the COVID-19 pandemic. Therefore, the year-over-year numbers are somewhat skewed, as there were still many transfers, payments and expenditures related to the pandemic.

[Julie Vignola, Bloc, Beauport—Limoilou, QC]

In figure 2-2, on page 6, I see that, in gross dollars, the increase in the Canada health transfer is constant from 2011 to 2028. However, when I look at the axis showing the annual growth rate, I notice by following the dotted line representing the next few years—the forecast—that the curve drops even lower than what is shown for 2011 to 2017. What explains this phenomenon?

[Yves Giroux]

This is because gross domestic product, or GDP, growth will be somewhat slower than we have seen in previous years. Growth in the Canada health transfer, or CHT, is tied to nominal GDP growth. When there is significant growth in nominal terms—that is, economic growth and inflation—the growth is solid.

We see for some of the earlier years that there were one-time non-recurring amounts during the COVID-19 pandemic, so there is a spike in figure 2-2, followed by a fairly steep decline. Going forward, the CHT will grow at a guaranteed minimum rate of 5%, rather than 3%, but economic growth and inflation are not expected to exceed this floor. For this reason, we expect most years to see a 5% growth in the CHT, except for one year when it is expected to approach 6% owing to economic growth.

[Julie Vignola, Bloc, Beauport—Limoilou, QC]

Given the aging and growing population, are the transfers you just mentioned, which are at a minimum rate of just over 5%, sufficient to meet the needs and make up for 30 years of cuts in those transfers?

[Yves Giroux]

That is a very good question. It always depends on what is considered sufficient or insufficient. Concerning that, we publish an annual analysis of the long-term fiscal sustainability of the federal and provincial governments. We will be updating that study in June or early July to take into account the post-pandemic situation, but also the new health transfers. I hope that answers your question, at least in part.

[Julie Vignola, Bloc, Beauport—Limoilou, QC]

I am looking forward to reading that report. The last one was very interesting.

This year, we received the 2023-2024 main estimates before the federal budget was tabled in the House. We expect that some of the announcements in the federal budget will not be in the document I have in hand now. Do you have an approximation of the total amount of spending that was announced in the federal budget a few weeks ago, but not included in the main estimates?

[Yves Giroux]

Yes. We estimate that the federal budget contains just over $9 billion in current year spending that is not in the main estimates. This is because some of the spending announced in the federal budget could not make it into the main estimates.

[Julie Vignola, Bloc, Beauport—Limoilou, QC]

So it will likely be included in the supplementary estimates.

[Yves Giroux]

Yes, unless the government decides to abandon some of these measures.

[Julie Vignola, Bloc, Beauport—Limoilou, QC]

The government is in negotiations with its employees right now. I assume that the expenses related to the agreements that have been signed recently are not in the main estimates.

[Yves Giroux]

I don't think so, but there is always the possibility that lower spending in some areas could provide some flexibility to fund retroactive pay increases for employees with agreements, if they are ratified by the union, of course. However, to my knowledge, there is no specific amount allocated in the main estimates.

[The Chair, Conservative, Kelly McCauley]

Thanks very much.

Mr. Johns, go ahead, please.

[Gord Johns, NDP, Courtenay—Alberni, BC]

Thank you so much for being here.

You talked about the management consultants and the increases that you're seeing. The minister has highlighted, both in the House and in the budget, that they're reducing roughly 15% of management consulting fees in 2023-24.

Do you see government moving towards that?

[Yves Giroux]

There's no evidence of that in the main estimates. However, the main estimates, like the supplementary estimates, are “up to” amounts. That gives authority to ministers and the government to spend up to these amounts. They don't have the obligation to spend all of them, but I haven't seen that reduction materialize in the main estimates, in good part because the mains were tabled before the budget made that announcement.

I haven't seen that.

[Gord Johns, NDP, Courtenay—Alberni, BC]

Given the overall amount of money that's being spent on outsourcing and this unbelievable amount of growth in outsourcing, this 15%, where does that bring us back to? Does that bring us back to what would have been spent in 2021 or 2022? Really, this isn't substantial given the increase, is it?

[Yves Giroux]

I'm looking at Jill and Kaitlyn to see if they know.

I think that would bring us back one or two years. It wouldn't bring us back five, six or seven years.

[Gord Johns, NDP, Courtenay—Alberni, BC]

What would it take to bring us back five, six or seven years?

[Yves Giroux]

It would probably be a 30% to 35% reduction.

[Gord Johns, NDP, Courtenay—Alberni, BC]

Okay. Thank you for that.

We talked about the benefits and the cost of benefits of OAS, especially with the increase for those over 75. What would it cost to bring in everybody over 65 to get the same benefit as those over 75? Have you examined that?